Sugar Falls for Third Day on Speculation Brazil Supply to Rise
Sugar fell for a third day in London on speculation supplies from Brazil, the world’s largest producer, will increase when the new harvest begins.
Cosan SA Industria & Comercio said yesterday it plans to boost its capacity for producing sugar and processing cane. It also said cane output in Center South, Brazil’s main growing region, may come to as much as 575 million metric tons this year. Production in the area was 542 million tons in the previous marketing season, according to figures from the Brazilian Sugarcane Industry Association, or Unica.
“News that Brazil’s Cosan, one of the largest sugar and ethanol producers in the world, said it would increase sugar production capacity to 6 million tons from 4 million tons in five years” pulled prices down, Paul Deane, an economist at Australia and New Zealand Banking Group Ltd., said in a research note today.
White, or refined, sugar for May delivery fell $11, or 1.5 percent, to $739.50 a ton at 10:08 a.m. on NYSE Liffe in London. The contract has slid 4.3 percent in three sessions.
Raw sugar for May delivery dropped 0.5 percent to 28.65 cents a pound on ICE Futures U.S. in New York. “Options-related dealings” contributed to the sweetener’s 2.1 percent retreat yesterday, Deane said.
“The volatility seen in raw sugar in the last few days can, at least in part, be attributed to option expiry for the front month, which occurs today,” Jason Cole, a broker at Starsupply Renewables SA in Geneva, said by e-mail today.
Center South’s cane production will come to at least 570 million tons this year, said Cosan. It plans to increase sugar output this year to benefit from higher prices, Chief Executive Officer Marcos Lutz said. It will raise the portion of cane turned into sugar above the current 55 percent, he said.
Mills in Center South will produce 33 million tons of sugar this year, Pedro Mizutani, chief operating officer at Barra Bonita, Brazil-based Cosan, said yesterday. The region produced 28.6 million tons in 2010-11, Unica data show.
Raw sugar may be poised to fall this month, according to technical analysis by OptionsXpress Holdings Inc. A lower 14-day relative-strength index for raw sugar for July delivery and a gain in the 200-day moving average are a sign that the market is poised to turn to bearish from bullish, said Mike Zarembski, a senior commodity analyst at OptionsXpress.
Cocoa for March delivery slipped 0.3 percent to 2,233 pounds ($3,579) a ton on NYSE Liffe. Cocoa for May delivery fell 0.5 percent to $3,390 a ton on ICE Futures U.S. in New York after yesterday reaching $3,444, the highest price for a most- active contract since January 2010.
Robusta coffee for May delivery gained 0.4 percent to $2,291 a ton in London. Arabica coffee for May delivery was little changed at $2.618 a pound in New York.